LO.3 (Levels of costs) Leopold & Olney LLP has 5 partners and 12 staff accountants. Thepartners each work 2,100 hours per year and earn $350,000 annually. The staff accountantseach work 2,600 hours per year and earn $80,000 annually. The firm's total annual budgetfor professional support available to partners and staff accountants is $312,750. The firmalso spends $125,100 for administrative support that is used only by the partners.a. Assume that total support cost is considered a unit-level cost based on number ofwork hours. What is the support rate per labor hour?b. If an audit engagement requires 60 partner hours and 220 staff accountant hours,how much professional support cost would be charged to the engagement using therate determined in (a)?c. Assume that support costs are considered batch-level costs based on number of workhours. What are the support rates per labor hour? (Round to the nearest cent.)d. If an audit engagement requires 60 partner hours and 220 staff accountant hours,how much support cost would be charged to the engagement using the rates deter-mined in (c)?

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Answered: LO.3 (Levels of costs) Leopold & Olney…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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D4
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Gary needs to determine the total costs of his company's tile division and sink division to determine profitability once sales are recognized. The tile division incurs $263,000 in costs, while the sink division incurs $371,000 in costs. Two support departments assist the tile and sink divisions, and they incurred the following costs: Business Services, $79,000, and Maintenance, $51,000. Business Services is used 40% of the time by the tile division, while Maintenance spends 75% of its time helping the sink division. Using the direct method to allocate support department costs, what are the total costs for which the two operating divisions should be held responsible? Operating Departments Tile Total $ 304800 $ Sink Total costs 459200 $ 764000
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Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and P2). The distribution of each service department's efforts (in percentages) to the other departments is: From S1 S2 S1 S2 To P1 10% 20% ? 10% S1 S2 P1 P2 – P2 $225,000 75,000 62,000 180,000 ?% The direct operating costs of the departments (including both variable and fixed costs) are: 30 Required: 1. Determine the total cost of P1 and P2 using the direct method. 2. Determine the total cost of P1 and P2 using the step method. 3. Determine the total cost of P1 and P2 using the reciprocal method.
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ed Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and P2). The distribution of each service department's efforts (in percentages) to the other departments is: From S1 52 $1 S1 S2 P1 P2 20% $2 20% $ 220,000 74,000 61,000 175,000 To P1 30% ? The direct operating costs of the departments (including both variable and fixed costs) are: Required 1 Required 2 P2 Production department 1 Production department 2 ?% Required: 1. Determine the total cost of P1 and P2 using the direct method. 2. Determine the total cost of P1 and P2 using the step method. 3. Determine the total cost of P1 and P2 using the reciprocal method. 40 Complete this question by entering your answers in the tabs below. $ $ Determine the total cost of P1 and P2 using the reciprocal method. (Do not round intermediate calculations. Round your final answers to whole dollars.) Required 3 Total Cost Allocated 183,548 346,458 < Required 2

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